Ten-year JGB yield hits near decade low on hopes of more BOJ action

March 20, 2013|Reuters

* Haruhiko Kuroda takes the BOJ helm

* Ten-year futures climb to record high of 145.56

TOKYO, March 21 (Reuters) - Yields on benchmark 10-yearJapanese government bonds fell to a near-decade low on Thursday,driven by strong expectations that new central bank chiefHaruhiko Kuroda will buy more bonds as part of a bold easingpolicy to pull Japan out of deflation.

"Many investors do not want to hold cash before BOJ easesaggressively," said Tadashi Matsukawa, head of Japan fixedincome at PineBridge Investments.

Kuroda, who officially became the Bank of Japan Governor onWednesday, is expected to hold a news conference later onThursday.

"Kuroda will have an inaugural address today. He is alreadyreported in newspapers that he is going to be easingaggressively," Matsukawa said.

The 10-year yield slipped 0.5 basis point to0.585 percent after touching 0.580 percent, its lowest levelsince June 2003. The market was closed on Wednesday for aholiday.

Ten-year JGB futures climbed as much as 16 ticks toa record high of 145.56. They ended the morning session 9 tickshigh at 145.49.

A Reuters poll showed confidence among Japanesemanufacturers improved for a fourth straight month in March andshould soon turn positive, further indications that a softer yenand Abe's stimulus plans are helping lift the gloom in theeconomy.

JGBs were also supported by many investors putting theirredemption money back into the market.

"In addition to speculation regarding additional monetaryeasing by the BOJ, several factors putting downward pressure oninterest rates have coincided this month, as it is the lastmonth of the fiscal year," Citigroup said in a note.

"More than 10 trillion yen ($104.7 billion) of JGBs are dueto mature in the second half of March."

The brokerage said the 10-year yield could drop below 0.500percent if the central bank increases purchases of five- and10-year JGB significantly.

But it added that JGB yields could rebound at some pointduring April-June as many investors were likely to pocket gains.